Stocks appear to be headed for year-end gains due to improving economic data, Tom Lee of JPMorgan said Thursday after the S&P 500 closed above 1,700 for the first time.

"I think it's great that we did close above a round-number milestone," he said. "I feel comfortable thinking that you can buy the market today and still get pretty good returns into year-end because, one, I think there's data now showing U.S. is accelerating."

On CNBC's "Fast Money," Lee cited the Institute for Supply Management and signs that Europe is improving, which is making the case for higher earnings and increased multiples.

Lee raised his year-end S&P 500 target for the second time this year. Last week, he increased it to 1,775 from 1,715.

The tapering of asset purchases by the Federal Reserve, he added, could end up as a positive for stocks, he added.

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"The taper is really going to have to address the question of position squaring because I think the market, the participants are way 'overweight' fixed income," Lee said. "And if they start to think interest rates are going up, I think that money does come out, hopefully goes into equities."

— CNBC's Stephanie Landsman contributed research to this report. Follow her on Twitter: @StephLandsman.

Trader disclosure: On Aug. 1, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami's wife, Linda Snow, works at Merck; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long C; Karen Finerman is long JPM; Karen Finerman is long TGT; Karen Finerman is long GOOG; Karen Finerman is long EBAY; Karen Finerman is long M; Karen Finerman is long M; Karen Finerman is long OCN; Karen Finerman is long RLGY; Karen Finerman is long SPY; Karen Finerman is long MDY PUTS; Brian Kelly is long Yen; Brian Kelly is short US dollar; Brian Kelly is short Copper; Brian Kelly is short Silver; Brian Kelly is short British Pound; Brian Kelly is short Aussie Dollar; Jon Najarian is long AAPL; Jon Najarian is long EBAY; Jon Najarian is long OKE; Jon Najarian is long YELP; Jon Najarian is long TWC; Jon Najarian is long MET; Jon Najarian is long TRLA; Jon Najarian is long Z; Jon Najarian is long COP; Jon Najarian is long HUN; Jon Najarian is long MGM; Jon Najarian is long PBR.